August 11, 2017 / 4:56 AM / 10 months ago

UPDATE 1-Shanghai exchange mulls raising steel margins as turnover soars

BEIJING, Aug 11 (Reuters) - Shanghai Futures Exchange has told its members it may raise margins on steel rebar futures contracts if turnover in one of China’s largest derivatives markets remains too high, three sources familiar with the matter said on Friday.

“Regulators believe that this round up (in trading volumes and prices) is related to speculation,” said an executive with a large futures brokerage.

This is the latest sign that soaring steel rebar futures , which hit 4-1/2-year highs on Thursday, have drawn the scrutiny of regulators amid concerns that government-enforced cutbacks at steel mills are tightening supplies.

Turnover in the contract hit 11.29 million lots on Monday, according to the exchange, highest since May 2016, and volumes have since ranged between 8.8 million and 9.5 million lots.

China’s steel association said on Thursday it believes the surge in prices is due to speculation rather than strong fundamentals.

On Friday, the most-active January steel rebar contract was down 3.5 percent at 3,833 yuan ($574.80) per tonne.

Steps like forcing traders to top up margins, the amount of cash members have to put aside as a deposit, typically curb volumes and often prompt investors to close out positions.

Last year, China’s three major commodity exchanges introduced a string of measures to crack down on speculative trading in everything from coal to rubber futures.

$1 = 6.6684 Chinese yuan Reporting by Zhang Xiaochong and Coco Li; Writing by Josephine Mason; Editing by Tom Hogue

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